India a dynamic IT service exporter

Terming India as one of the most dynamic exporters of IT and ICT-enabled services (information and communication technology), a UN report has said India’s exports of the entire sector have risen to an estimated $69 billion from $10 billion. India managed to increase its export market share to 4.2 per cent from 1.6 per cent between 2002 and 2007, said the United Nations Conference on Trade and Development (UNCTAD)’s “Information economy report 2009: trends and outlook in turbulent times”.

“Between 2000 and 2007, India and Ireland reported the largest growth in export market share in IT and ICT-enabled services. In the case of Ireland, the world’s fourth largest exporter in 2007, its market share grew by 2.4 percentage points to 4.6 per cent. Other dynamic developing and transition economy exporters included Argentina, China, Kuwait, Russian Federation and Singapore,” the report said.

It further said IT and ICT-enabled services — computer programming, software development, customer-service call-centre work and back-office services — are of growing importance in world trade and have been more resilient during the crisis. Increased broadband connectivity in a rising number of countries has eased the reorganisation of the production of many services and led to the expansion of export-oriented production of services in places offering attractive locations or lower wages. The expansion of offshore services has only just begun, the report pointed out.

According to market analysts, the global market for the offshoring of IT and ICT-enabled services was estimated at $90 billion in 2008, of which IT accounted for 60 per cent.

Giving an outlook, the report said services exports could decline in the short-term due to the slowdown in economic activity. However, as recession adds to the pressure on firms to reduce costs, some would choose to offshore more and new services to lower-cost locations and in the medium-to long-term, as the global economy recovers, offshoring of services will widen, the report said.